Hero to invest Rs 5,000 crore to raise global production capacity

Neemrana: India's largest two-wheeler maker Hero MotoCorp plans to invest Rs 5,000 crore in manufacturing plants, including in Colombia and Bangladesh, as well as new facilities at Gujarat and Andhra Pradesh as it targets 12 million annual production capacity by 2020.

The company, which will formally inaugurate its plant here tomorrow, plans to enter Europe by the end of next year.

"We have lined up total investment of over Rs 5,000 crore across the globe including manufacturing plants in Colombia and Bangladesh and the new plants coming up at Gujarat and Andhra Pradesh and the Hero Global Centre for Research & Design at Kukas in Rajasthan," Hero MotoCorp Vice Chairman and Managing Director Pawan Munjal told reporters here.

The company has invested Rs 1,000 crore at the Neemrana facility and has also started work on the Colombia plant. The work on Bangladesh facility will begin soon, he added.

"By November we will start work on the Halol plant in Gujarat that will be followed very soon at the Andhra Pradesh plant. We won't wait for Gujarat plant to come up for setting up the plant in Andhra Pradesh," Munjal said.

The Gujarat plant will have an annual capacity of 1.8 million units while the Colombia and Bangladesh will have 1.5 lakh units each annually, he added.

The plant at Andhra Pradesh will also have an annual capacity of 1.8-2 million units.

The company plans to invest Rs 653 crore at Kukas, Rs 1,600 crore each at Andhra Pradesh and Gujarat plants, Rs 200 crore at Colombia plant and Rs 100 crore on the Bangladesh facility, Munjal said.

"The Bangladesh plant will be used to cater to domestic demand as well as cater to neighbouring countries such as Myanmar and may also even supply to the neighbouring Indian states from there," he added.

Elaborating on entry in the European market, Munjal said: "We could enter Europe possibly toward the end of 2015. We are looking to launch the hybrid scooter Leap there in Western Europe first".

He added that the company is in the process of homologating its products for the US market.

"We are expecting to enter there by 2016," Munjal said.

Commenting on the domestic market, Munjal said the company is targeting to achieve 50 per cent market share.

"We would like to have 50 per cent market share, which we don't have today. Scooter is a fast growing segment but due to capacity constraints we could not increase our market share. So with the fresh capacities coming in, we will be able to cater to the demand for scooters, which will also bring numbers for us besides motorcycles," he added.